THE Guyana Revenue Authority (GRA) stands firm in its position concerning the US$214.4 million flagged by IHS Markit in its audit of Exxon’s expenses, 1999-2017, despite recent statements by Alistair Routledge, CEO of Exxon Mobil Guyana Ltd (EMGL), indicating adjustments to the initial audit figure.
This matter revolves around the discrepancies between the figures presented in the audit report and the GRA’s official stance on the issue.
Notably, Exxon Mobil is currently undergoing two cost-recovery audits, with the first audit encompassing expenses incurred from 1999 to 2017, totalling US$1.678 billion, and the second audit focusing on the 2018-2020 period, involving costs amounting to US$7.2 billion.
In response, the GRA’s Commissioner-General, Godfrey Statia, issued a statement reiterating the authority’s position that the Cost Bank Adjustment of US$214.4 million, as specified in the “Audit Report Recommendation Final” by IHS Markit, represents the final and accepted figure
Statia also clarified that the GRA’s previous correspondence to IHS Markit seeking clarification should not be construed as a change in the Authority’s position regarding the audit figure or the reopening of the process.
Further, the Authority unequivocally states that its correspondence to IHS Markit seeking clarity to the said “Audit Report Recommendation Final” and copied to EMGL should in “no way or form” be construed as a change in the Authority’s position that the Cost Bank Adjustment of US$214.4M be adjusted, nor to re-open the process as intimated by the CEO of EMGL
During a press conference on Tuesday, Routledge disputed reports that an agreement on the adjustment was reached between the company and the Government.
He said that regarding the initial audit, the government’s auditing firm, IHS Markit, issued a draft report containing queries about an amount of approximately 214 million USD.
Routledge pointed out these queries were not findings of irregularities, but sought additional documentation and clarification. EMGL president said that the oil giant worked diligently to provide further documentation.
He said, “We believe that we provided the documentation to substantially reduce the queries that were out there from the initial draft audit.”
The Guyana Revenue Authority (GRA) is the authoritative body overseeing the audit, as pointed out by the PPP/C government.
Routledge said that GRA requested ExxonMobil to re-engage IHS Markit to review the documentation provided after the initial audit was halted. However, he anticipates that the remaining queries will be resolved, with only a minor de minimis amount possibly unverifiable due to the age of the records.
“We’re very clear on what the international standards are for us in the oil and gas business. We follow those standards, we booked appropriately. We have a lot of checks and balances in place to ensure appropriately.
Minister of Natural Resources, Vickram Bharrat, recently said that since the inception of the audit, the government’s position has been to consistently emphasise that it is the GRA which plays the pivotal role in determining the final outcome of the audit in question, in line with the Production Sharing Agreement (PSA).
He underscored that the Ministry of Natural Resources’ role in the process was to oversee the audit, as stipulated in the PSA, and facilitate information exchange among all relevant parties, including the GRA.
However, based on advice from Gossai, that initial claim of US$214,911,994 was reduced to US$3,414,853.68.
In response to this dramatic shift, Minister Bharrat formally sought clarification from the GRA, in a letter dated November 28, 2022, seeking a “No Objection” to confirm this revised figure.
Fast forward to July 2023, Minister Bharrat said that the Ministry’s Senior Petroleum Coordinator, Bobby Gossai Jr., while in a meeting with himself and Vice-President Bharrat Jagdeo, reported that the initial sum was further adjusted, first to US$11,497,140 and eventually down to US$3,414,853.68.
Minister Bharrat, considering his previous correspondence with the GRA and the agency’s critical role in the audit process, said that he assumed that this reduction had been achieved in consultation and collaboration with the GRA.
“I subsequently learnt that the GRA did not agree with the position, and the initial claim of US$214,911,994 remains the same,” he said.
In light of the foregoing developments, Minister Bharrat reiterated that the government’s stance remains unwavering, affirming that the GRA is the sole entity authorised to make the final determination on the matter.
“After examining all the facts, it is clear Gossai acted without the requisite authorisation to engage EEPGL [Esso Exploration and Production Guyana Limited] and provided inadequate advice, and as such, I have asked the Permanent Secretary to take the necessary disciplinary measures,” the Minster said in his letter.
Additionally, he said that the government will establish new protocols and systems to prevent similar lapses in the future, emphasising full disclosure and transparency in dealings with stakeholders in the sector.
In auditing Exxon’s expenses from 1999 to 2017, IHS Markit flagged a US$214M sum of questionable spending. This figure received a no-objection from GRA, and an indication to close the US$1.6B audit of Exxon’s expenses.
However, following this no-objection, it was revealed that a staff member of the Ministry of Natural Resource’s Petroleum Unit engaged ExxonMobil’s local subsidiary, formerly known as EEPGL, in reducing the US$214 million to US$3 million.
